House building drove much of the growth for the construction industry in June.
Photograph: Bloomberg/Getty Images

Britain’s construction industry staged a stronger than expected recovery in June, overcoming the worst of a slowdown this year and helping edge the Bank of England closer towards raising interest rates.

After suffering during the heavy snow earlier this year, when diggers and cranes were forced to fall idle across the country, bright sunshine and warmer weather over the past month helped builders back to work.

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The gauge of activity on the purchasing managers index – closely watched by the Bank for signs of economic strength – rose to 53.1 from 52.5 in May, hitting the highest level in seven months against economists’ expectations of a static reading. Anything above 50 on the PMI reflects growth in economic activity rather than contraction.

The rebound for the industry could suggest much of the weakness earlier this year was the result of the “beast from the east” and was not triggered by a broader malaise for the building trade.

Dismissing the fears of a slowdown on Tuesday, Michael Saunders, a member of the Bank’s rate-setting monetary policy committee, said the UK economy was continuing to grow at a modest and steady pace, similar to the average of the past couple of years.

In an interview with CNBC, Saunders warned that interest rates would need to rise should the UK economy continue to show signs of strength. “If the economy plays out as I expect, it may be that rates need to go up a little faster,” he said.

Threadneedle Street delayed raising the cost of borrowing after weak economic data in the wake of heavy snowfall earlier this year, although the Bank has since opened the door for an interest rate hike in August. The Office for National Statistics also revised higher its estimate for economic growth in the first quarter, thanks to better readings from the construction industry.

The ONS said last week the economy grew by 0.2% in the first quarter, against two earlier forecasts for growth of 0.1%.

Observers said big-ticket infrastructure projects such as the expansion of Heathrow – backed by MPs last week – and HS2 would be crucial to ensuring the UK remains an infrastructure leader on the world stage after Britain leaves the EU.

Brexit uncertainty has caused some businesses to put construction projects on hold in recent months, which could make government spending key for encouraging firms to invest in Britain.

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Optimism was strongest outside London in the IHS Markit/Cips survey, with particular strength seen in the north-west, West Midlands and Bristol. While the house building industry drove much of the growth there were fewer new projects for civil engineers, holding back stronger growth.

Despite the better news, Samuel Tombs of the economics consultancy Pantheon Macroeconomics said the outlook remained bleak for the year ahead as the UK leaves the EU. He said the proportion of builders in the survey expecting activity to increase over the next year remains was well below the 20-year average for the poll.

Max Jones of Lloyds Bank said: “The sector is hardly motoring, with some large contractors blaming Brexit uncertainty for the delay or cancellation of projects.”